From traditional banks to digital platforms, a personal loans have seen a long journey, but what has not changed is the primary business practices. While lending and borrowing have become easier, it is still seen as an instrument for quick financing to people in need.
How Personal Loans Has Evolved
A personal loan has always been a preferred financial tool as they are unsecured, no security required and it is available for all purposes. However, in the recent past personal loan has seen substantial growth as a credit instrument. Some of the reasons for this evolution are:
1. More Accessible:
Gone are the days when you had to apply to multiple financial institutions and wait for at least one to accept your loan application at favorable terms. However, fintech has changed the personal loan game forever. With online lending, the process has become simplified, more accessible and with zero processing fee for personal loan. The softened personal loan eligibility criteria have made access to finance easy for everyone. All you have to do is check the eligibility criteria and apply for the loan before you know your loan is approved and credited into your account.
2. Instant Personal Loans Online:
Earlier one loan was equivalent to a stack of forms and documents that one had to fill and submit. Not anymore, now with the digital age, online application has taken over the seat. The entire process has now become paperless making it comfortable for both humans and the environment as it has minimized the carbon footprint. The advanced software help scrutinizes the information, reducing the application process timeline, thereby making finance available quickly. Now you can sit comfortably at home and apply for a loan, through the lender’s website or app.
3. Reduced Bias:
Earlier due to the human intervention during the personal loan application, there were chances of human intervention throughout the process, which leads to human bias and prejudice. The digital age has done with this by the use of advanced algorithms while analyzing the loan application and helping the underserved also with their finances.
4. No Effect On Credit Score:
A research has shown that the major reason for rejection of loan was credit score, however with the recent developments this is no longer the case. Fintech analyses your power to repay the loan before you apply for the loan and accordingly accepts or rejects your application.
5. More Competition:
In the past banks had a monopoly for personal loans which restricted the number of applications being accepted. Also, the lenders had a monopoly in the amount being sanctioned and the interest rate is changed. However, the scenario has changed now, the lender is now trying to increase their overall loan sales by giving a personal loan to more applicants. With the extensive market competition, each lender is offering a flexible interest rate and other benefits to attract more customers. This in turn has acted as a blessing to the customers looking for funds to finance their emergencies.
6. Prior Information Is Available:
Earlier if someone had to apply for a loan, they had to visit the lender to get all the information and details about the loan. However, with the digital age, all the information is now available online. With the personal loan EMI calculator, you can also calculate your monthly EMIs and other financial pressure that might fall on you due to the loan. There are also options to compare the personal loan offering of various lenders to make the right
7. Available For All Needs:
The digital age has led to an easy and lenient personal loan application. Thus, now one can avail of the personal loans for all your needs like medical, wedding expenses, vacation, education, or any other.
With an increase in the millennial in India, the market will see an extensive increase in the demands of individuals. This in turn will lead to an increase in the spending as well as the borrowing rate among the youth. While personal loan has seen a great transformation in the last decades, the future awaits a further growth of up to 58%.